In the paper we introduce technological comparative advantage and transaction costs into the Heckscher-Olin (HO) model and refine the HO theorem, the Stolper-Samuelson theorem, the Rybczynski theorem, and factor equalization theorem. The refined core theorems can be used to accommodate recent empirical evidence that is at odds with the core theorems.

Abstract: This introduction surveys the evidence on the linkages between globalization and poverty, drawing on fifteen papers prepared for an NBER project under my direction. We focus on two measures of globalization: trade integration (measured using tariffs or trade flows), and international capital flows. Many economists have used the Heckscher-Ohlin framework in international trade to argue...

The aggregated incidence of bilateral trade costs is derived from the gravity model. Incidence is equivalent to a TFP penalty. Sectoral and national differences in TFP have sharp implications for the equilibrium pattern of production and trade in a specific factors model of production. Unskilled labor is intersectorally mobile. Skilled labor acquires sector specific skills. Productivity shocks ...

There is little disagreement among most economists that countries benefit from trade liberalization. Yet, whether unilateral, multilateral (through the World Trade Organization) or through regional integration agreements (RIAs), trade liberalization has been one of the most controversial economic issues of our time. It is the focus of everyone from politicians to union leaders and anti-globaliz...

ly speaking, we can identify three primary principles of social organization. Hierarchy uses authority to create and coordinate a horizontal and vertical division of labor—a bureaucracy in Weber’s ideal-type form. Market relies on the price mechanism to coordinate competing and anonymous suppliers and buyers. Community relies on shared values and norms. Table 1.1 summarizes the key contrasts. R...

J.-P. Schwitzguébel, J. Kumpiene, E. Comino, T. Vanek Laboratory for Environmental Biotechnology, Institute of Environmental Science and Technology, Station 6, EPFL, CH-1015 Lausanne, Switzerland; 2 Division of Waste Science and Technology, Department of Civil, Mining and Environmental Engineering, Luleå University of Technology, SE-97187 Luleå, Sweden; 3 Dipartimento di Ingegneria del Territor...

a r t i c l e i n f o This paper examines the effects of conversion of one type of physical trade restrictions into another on the intra-country wage inequality in a standard 2 × 2 × 2 Heckscher–Ohlin–Samuelson model. It shows that a conversion of an import-quota into an equivalent voluntary export restraint raises wage-inequality in the country importing the unskilled-labor intensive good and ...

I develop a factor content of trade prediction for the Heckscher-OhlinVanek model (HOV) that relates bilateral differences in country endowments to bilateral differences in factor contents. The results are striking. In comparisons of North-South factor contents or factor contents of countries with very different endowments (e.g., with very different capital-labor ratios), there is clear support...

So long as both goods are produced and factor intensity reversals do not occur, each price vector (pX , pY ) corresponds to a unique factor price vector. This should be pretty obvious from both the Woodland-Mussa and the Lerner-Pearce diagram. With the same technology and given prices, there is a unique intersection between the zero profit lines in the Woodland-Mussa diagram. Similarly, for giv...